Prepping Employees for Their Golden Years: Part One of a Two-Part Column on Retirement Planning at Colleges and Universities

Patton, Carol, University Business

VIRTUALLY EVERY HIGHERED institution offers some type of employee retirement program along with a handful of optional workshops on retirement-related topics. But is that enough? Considering the country's soaring gas prices, inflation, skyrocketing health care costs, global terrorism, dropping home values, and Social Security's shaky status--just to name a few worries--should IHEs be doing more to prepare employees for retirement?

Results from a recent survey lean in that direction. The Employee Benefit Research Institute cosponsored the 2008 Retirement Confidence Survey, in which 1,057 workers age 25 and up, as well as 265 retirees, responded to a series of retirement-related questions. Some key findings:

* Twenty-two percent of workers and 28 percent of retirees reported they have no savings of any kind.

* The percentage of workers who were very confident about having enough money for a comfortable retirement decreased from 27 percent last year to 18 percent this year, which reflects the biggest one-year drop in the history of the survey.

* Almost half of the retirees (44 percent) stated that they spent more than expected on health care expenses.

* Nearly half the workers reported total savings/investments (excluding the value of their primary residence or any defined benefit plan) of less than $50,000.

The bottom line is this: Unless the economy changes or the saving and spending habits of American workers do, many will be in trouble when they retire--that is, if they ever can retire.

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EDUCATE EARLY

Many people who come into Paul Strebel's office at Cornell University are just a few years away from retirement, yet are clueless as to their financial retirement status. A finance professor at Cornell and also a certified financial planner with The Strebel Planning Group in Ithaca, N.Y., he says some of his colleagues are surprised to learn they really can't retire in two years--that they may need to work another five.

Cornell and other IHEs offer a variety of free retirement education seminars, usually conducted by financial service firms. But many of his clients rate those workshops as "very poor." The main reason, he says, is that the financial advisors can't go into depth with employees because they're unfamiliar with their portfolios, which makes it almost impossible for them to offer meaningful advice. Instead, they address generic topics, such as the importance of diversifying investments. While important, employees need more than just the basics. He believes IHEs would be better off providing workshops on specific topics, such as high-risk investments or how to interpret your financial statement.

Even so, some schools are still missing the boat because they're targeting employees too late. They need to communicate retirement issues and best practices to employees when they reach the age of 40. "The earlier employees start looking at this, the better," Strebel says. "The longer employees wait, the less options they have."

ONLINE TOOLS

At least one institution has taken a more aggressive stance. The University of Miami recently contracted with a third-party investment firm--Invesra Inc. in Boston--to offer financial planning and investment advice to its 10,800 employees, says Margarita Acevedo, executive director of retirement programs for the school.

"There are so many demands on people's time, they're not focusing on the long term," she says. "As an educational institution, we do want to provide education. But in addition, we want to help [employees] not only have the information but also help them digest it and see how it applies to them long term."

Last year, the university froze enrollment in its traditional pension plan. Participants were asked to either stay with that plan or transfer their retirement income to a new defined contribution plan with a matching contribution. …

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